Rachel Company sells office chairs at $350 each, incurs variable cost per unit of $100, and has a total fixed expense of $30,000. How many units must be sold to achieve a target operating income of $55,000?

Question

Quizplus · Accepted Answer

To achieve a target operating income of $55,000, the company needs to earn a total revenue of $30,000 + $55,000 = $85,000. Since each unit sells for $350, the company needs to sell 85,000 / 350 = 243 units. However, since the question asks for the number of units that must be sold, the answer should be rounded up to the nearest whole number, which is 244 units.

Rachel Company Sells Office Chairs at $350 Each, Incurs Variable